Target discounts when not make prices discriminatory

Apr 21, 2014

21 April, 2014

Competition Appellate Tribunal (COMPAT) has on 2nd of April 2014 held that price and conditions can be said to be discriminatory, if and only if, they are different for the same quantities of the same product. Overruling the majority order of the Competition Commission of India (CCI), the Tribunal noted the contentions of the appellant (Schott Glass India Pvt. Ltd.) that higher discounts given by them to a particular company could have been available to others also if they (others) could assure higher off-take as assured by the particular company. Minority view in the impugned order, observing absence of any perceivable harm to competition in the downstream market and that too consumer interest, and therefore non-discriminatory nature of prices in case of target discount, was noted by the Tribunal while it found absence of violation of Section 4(2)(a) and (b) of the Competition Act. Plea of rise in profit margins of the particular company during specific period and fall in profits of others, was rejected by the Tribunal as not a competition issue.

Trade Mark Licensing Agreement necessary for securing trade secrets

Further, rejecting the CCI’s finding of unfair Trade Mark Licensing Agreement (TMLA), spelling-out exclusionary practice, while including provisions dealing with quality control, whereby the licensor had rights of inspection and monitoring, the Tribunal held that the clauses of said agreement were drafted to save the trademark rights and there was necessity of securing trade secrets through such agreements. Noting that there was no necessity for the appellant to push amber tubes along with the clear tubes, the Tribunal also overruled the finding of the Commission that there was tying-in inasmuch as the appellant insisted on purchase of amber tubes along with clear tubes. Violation of Section 4(2)(e) was also rejected by the Tribunal observing absence of the appellant in the downstream market.

Cross-examination of witnesses mandatory

Further, the COMPAT, on the question of non-grant of opportunity to cross-examine the interested witnesses, rejected CCI’s plea that specific request/application should have been made by the appellant. It was held that total reliance on the statements of such witnesses without their cross-examination was risky and uncalled for and that CCI should not have insisted on a separate application, once the question was raised before it through the pleadings.